Starbucks issues first US corporate sustainability bond

Starbucks Corporation has issued an underwritten public offering for the first US Corporate Sustainability Bond.

The company will use the net proceeds from the offering of $500 million in 2.450 per cent Senior Notes, due in 2026, to enhance its sustainability programs around coffee supply chain management through Eligible Sustainability Projects.

This includes coffee purchases from suppliers verified by a third-party as complying with Starbucks ethical sourcing verification program of Coffee and Farmer Equity (C.A.F.E.) Practices, the development and operation of farmer support centers in coffee growing regions, as well as short and long-term loans made through Starbucks Global Farmer Fund.

“Coffee is at the core of our business, and we intend to continue to finance initiatives that will make a positive social and environmental impact in our coffee supply chain as well as other areas across our business,” Chief Financial Officer of Starbucks, Scott Maw, said in a statement. “Issuing a bond focused on sustainable sourcing, demonstrates that sustainability is not just an add-on, but an integral part of Starbucks, including our strategy and finances.”

Each year, Starbucks invests significantly in its comprehensive approach to ethically source its coffee. This includes supporting coffee farming communities, mitigating the impact of climate change, and supporting long-term crop stability and farm sustainability.

Starbucks operates a network of eight farmer support centers around the world (Rwanda, Tanzania, Colombia, China, Costa Rica, Indonesia, Guatemala and Ethiopia), and has a commitment to provide $50 million in farmer financing in the form of short and long term loans. Starbucks also purchased a coffee farm in Costa Rica and has turned this into a global agronomy center.

All of this is grounded in the company’s open sourced C.A.F.E. Practices developed with Conservation International over 15 years ago. This rigorous set of best practices helps to ensure that the methods used in growing and processing coffee are efficient, effective and sustainable, both environmentally and socially. In 2015, 99 per cent of Starbucks 250 million kilograms of coffee purchases were verified as ethically sourced and Starbucks became a founding member of the Sustainable Coffee Challenge - a call to action to make coffee the first sustainable agricultural product in the world.

Sustainalytics, a leading global provider of environmental, social and governance (ESG) research and ratings, delivered the second opinion for the Sustainability Bond. This independent review offers investors additional insight into the proposed projects to be funded by the bond, as well as the expected positive environmental and social impacts of these projects. Sustainalytics also rates Starbucks as an ESG leader in both overall and relative performance to its peers.

Starbucks will publish annual updates of the allocation of the proceeds throughout the term of the sustainability bond until the proceeds have been fully allocated to projects meeting the eligibility criteria.